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Basics Statistics On Data

This document discusses several statistical concepts: 1. Correlation quantifies the relationship between two variables from -1 to 1, where -1 is a high negative correlation and 1 is a high positive correlation. Highly correlated variables may need to be removed from a statistical model. 2. Standard deviation measures the dispersion of data points from the mean, and is calculated as the square root of variance. A lower standard deviation means data is closer to the mean. 3. A normal distribution is a bell-shaped probability distribution that is symmetric around the mean. The mean, median and mode are equal in a normal distribution.

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9 views12 pages

Basics Statistics On Data

This document discusses several statistical concepts: 1. Correlation quantifies the relationship between two variables from -1 to 1, where -1 is a high negative correlation and 1 is a high positive correlation. Highly correlated variables may need to be removed from a statistical model. 2. Standard deviation measures the dispersion of data points from the mean, and is calculated as the square root of variance. A lower standard deviation means data is closer to the mean. 3. A normal distribution is a bell-shaped probability distribution that is symmetric around the mean. The mean, median and mode are equal in a normal distribution.

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MBA LOGISTICS & SUPPLY CHAIN MANAGEMENT
Copyright
© © All Rights Reserved
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MBA – Industry Collaborated Programs

BusinessV Analytics (BA)


Basic Statistics on Data

Business Analytics DISCOVER . LEARN .


Unit-I L1.4 EMPOWER 1
What is correlation?

• Correlation is used to test relationships between quantitative variables


and categorical variables. Unlike covariance, correlation tells us how
strong the relationship is between two variables. The value of
correlation between two variables ranges from -1 to +1.
• The -1 value represents a high negative correlation, i.e., if the value in
one variable increases, then the value in the other variable will
drastically decrease. Similarly, +1 means a positive correlation, and here,
an increase in one variable will lead to an increase in the other.
Whereas, 0 means there is no correlation.
• If two variables are strongly correlated, then they may have a negative
impact on the statistical model, and one of them must be dropped.

2
• A statistic that quantifies a relation between
two variables
• Can be either positive or negative
• Falls between -1.00 and 1.00
• The value of the number (not the sign)
indicates the strength of the relation
3
Standard deviation

• Standard deviation is a statistic that


measures the dispersion of a dataset relative
to its mean and is calculated as the square
root of the variance. The standard deviation
is calculated as the square root of variance by
determining each data point's deviation
relative to the mean.
4
Standard Deviation
• Standard deviation is calculated by taking the
square root of a value derived from comparing data
points to a collective mean of a population.
• Standard deviation represents the magnitude of how far the
data points are from the mean. A low value of standard
deviation is an indication of the data being close to the mean,
and a high value indicates that the data is spread to extreme
ends, far away from the mean.
 
5
Normal Distribution
• Normal Distribution: Normal Distribution is
a probability distribution that is symmetric
about the mean. It is also known as Gaussian
Distribution. The distribution appears as a
Bell-shaped curve which means the mean is
the most frequent data in the given data set.

6
In Normal Distribution
• Mean = Median = Mode
• Standard Normal Distribution: When in the Normal
Distribution mean = 0 and the Standard Deviation = 1 then
Normal Distribution is called as Standard Normal Distribution.
• Normal Distributions are symmetrical in nature it doesn’t
imply that every symmetrical distribution is a Normal
Distribution.
• Normal Distribution is the probability distribution without any
skewness.
7
• Skewness means the lack of straightness or
symmetry. Now, to get a better understanding let’s
discuss skewness in statistics through a cricket match
example.
• Skewness: Skewness in statistics is a measure of
lack of symmetry i.e. it measures the deviation of the
given distribution of a random variable from a
symmetric distribution (like normal Distribution).
8
• Positive Skewness
• In positive skewness, the extreme data values are
larger, which in turn increase the mean value of the
data set, or in the simple term in positive skew
distribution is the distribution having the tail on the
right side.
• In Positive Skewness:
• Mean > Median > Mode
9
• Negative Skewness
• In negative skewness, the extreme data values are
smaller, which decreases the mean value of the
dataset or the negative skew distribution is the
distribution having the tail on the left side.
• In Negative Skewness:
• Mean <  Median < Mode
10
Graph 1 – Negative Skewness
Graph 1 – Negative Skewness Graph 2 – Positive Skewness

11
Thank You

12

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